An Individual Voluntary Arrangement, or IVA, is a legal process which enables an individual facing financial difficulty to avoid going bankrupt by making a formal, legally binding deal with their creditors. Creditors have to agree to the process, but generally it allows your debts to be put to one side and paid, or part paid, over a period of up to five years.
How does an IVA work?
It is a contract between you and your creditors. You propose a plan to the people or organisations you owe money to. That plan could involve repaying a reduced amount, or being given more time to pay.
For the plan to go through, 75% by value of the creditors who vote must agree to it. If they do, the IVA becomes legally binding on all creditors involved. The approval is invalid, however, if more than half in value of the creditors who are not associates of yours vote against it.
During the IVA you keep control of your own financial affairs, subject to adhering to its terms. You continue to earn, and ideally get back on track financially. The IVA typically runs for a fixed period of three to five years.
A licensed insolvency practitioner is appointed to supervise the arrangement, making sure the agreed repayment plan is followed and reporting to creditors on progress.
An IVA is a matter of public record. It is entered on the Individual Insolvency Register for its duration.
How does it help?
- An IVA enables you to keep control of your own financial affairs and resolve your difficulties in a way that avoids the stigma and financial intrusion of bankruptcy.
- It is an organised, legal process for paying back creditors, which brings a measure of peace of mind.
How quickly can it be done?
Typically, from the point you contact us, you could be in an IVA within four to six weeks. It depends on how quickly financial information can be provided and how much creditor pressure there is.
What are the potential outcomes?
If the proposal is rejected, nothing happens except that you will need to take alternative steps to resolve your financial situation.
If the proposal is accepted, there are two possible endings:
- Resolution. You complete the IVA and are deemed to have paid the IVA debts in full, even where creditors were only part paid under the arrangement.
- Failure. If you fail to meet the IVA obligations, or encounter new financial difficulty with creditors arising after approval, bankruptcy may have to be considered.
A confidential conversation first
Personal debt is a difficult thing to talk about. The first call is private, free and carries no obligation, and it is usually a good deal less daunting than people expect.